27 July, 2012

At the end of 1992, just days
after Clinton’s election as president of the US, Alan
Greenspan, head of the Federal Reserve at that time, went to see the new president.
The famous economist and supporter of the neoliberal economy of deregulation,
warned Clinton
to withdraw his campaign promises for social reform, because, as he claimed,
the deficit reached a dangerously high level. Greenspan told Clinton that he should cut government
spending, so that interest rates would go down and the markets would boom. He
believed that markets would transform America, not politics. It was the
beginning of the full deregulated market for the US and the world.

The rise of computers during
90s, brought a new idea, that machines could create a stable world without the
need of political intervention. Economists and bankers viewed the world as a
giant economic system that now prevailed against all western governments. They
believed that the way for a global economic stability, was for nations to open
themselves up to the free capital flows. The computers created mathematical
models that parceled out the loans and then hedged and balanced them so that
there was no risk.

The large laboratory, chosen
by the gurus of the free market to conduct their new experiment, was South-East Asia. Under the American pressure, countries like
South Korea and Thailand,
withdrew all their restrictions allowing the inflow of capital from the West.
This helped for the so-called “Asian miracle” in the economy.

But a group of economists in
the White House, headed by Joseph Stiglitz, worried that, the flood of money
from the West, would fund a massive speculative bubble in property, and when
the boom collapsed, the money would flee, leaving countries like Thailand and
South Korea decimated. According to Stiglitz, all this flow of money was not
for the interest of Korea
or US, but for the interest of a very small group of people making money from
these medium-term capital flows, i.e. some bankers and hedge funds.

But the group faced the
opposition of Robert Rubin, which was the Secretary of Treasury at that time,
and former co-chairman in Goldman Sachs. Rubin was preventing the warnings of
the group to reach the president.

The Asian crisis began in Thailand.
Hundreds of thousands of offices and apartments were built, but nobody wanted
them, and brokers went bankrupt under the weight of loans. Investors from the
West panicked and rushed to get their money out of the country. The panic began
to spread first in South
Korea. Housewives formed queues to give
their surplus to the government to save country, but this was not enough.

Then, groups of technocrats of
IMF arrived and offered billions of dollars in loans to stabilize the
economies. The IMF argued that the reason of the crisis was that Asian
economies were not westernized enough. In exchange for loans, they should turn
to free market models. This meant cuts in government spending and elimination
of the corruption and nepotism of the power elites. The crisis worsened and
spread to Indonesia,
whose president Suharto was an “emperor” enclosed by a corrupt clique of
advisors and family members. At first, he refused to do what the IMF wanted, so
the IMF turned to Rubin.

Rubin and the Treasury were
determined to press Suharto to do what they wanted. In January 1998, Suharto
retreated and signed an agreement with IMF. Indonesia received a huge loan to
stabilize the economy which worked for a while. But later, the Indonesian
currency collapsed, loosing 80% of its value and destroying the economy. The
exchange rate of the country collapsed and the economy went into free fall. Indonesia was
not the only one. In every country which received loans from IMF, such as Thailand and South Korea, the economy was stable
for a while and then the exchange rate collapsed. Billions of dollars were
given to Asian banks from the IMF, but many of them were used immediately to
rescue western investors who wanted to take their money out of the country.

Providing billions of dollars
in loans, the IMF rescued western investors and pushed the taxpayers of the
countries deeper into debt because they had to repay the IMF. The result of the
cuts was the destruction of the area. In Indonesia, the government subsidies
were removed as instructed by the western
bankers. Prices soared and within a few months, in a country of more than 200
million, 15% of the male workforce lost their jobs. Economic output fell by
14%. The economy collapsed and ethnic and religious strife began. The same
happened in Thailand and South Korea.
Millions of people went back into poverty from which they thought they had
escaped forever. By the mid 1998, the Asian economies collapsed. It was the
biggest disaster for countries since the big recession of the 30s.

This was the first
interference from outside in the deregulated market, which is supposed that
could bring automatically stability and prosperity. And of course, the intervention
was for the benefit of speculators and at the expense of the vast majority of
the people.

At the beginning of last
decade, when the towers of the WorldTradeCenter collapsed during 9/11 attacks, the market suffered the biggest drop in history.
Two weeks later, the “Enron” scandal revealed, and quickly became clear, that
this was just the tip of the iceberg of a massive fraud from the corporations.
Since the early 90s, many major companies were presenting fake profits, hiding
their debts, with the help of the largest accounting firms. The paradox is that
in the mid 90s, Greenspan had already realized that something was wrong with
the economy, but ultimately convinced himself that computers were increasing
the productivity in novel ways, too new to be detected in the data.

After September 11, and given
the great speculative bubble that was created during the previous decade, it
seemed that the American economy was about to collapse. Then Greenspan took
action by cutting down the interest rates several times. The goal was simple:
to encourage American consumers to borrow and spend. The consumers’ desires
would become the engine that would stabilize the system. It was a huge risk,
because cutting the interest rates to almost zero, Greenspan released a flood
of cheap money into the economy, which in the past led always to inflation and
dangerous instability. But this time it didn’t happen. A huge consuming boom
began, bigger than any other in history, without inflation. Everything seemed
to remain stable and the system seemed that it could manage itself without any
direct political control.

But ultimately, the reason for
this unusual booming was the exact opposite. It happened due to the massive
exercise of political power, from an elite thousand miles away. The Chinese
government kept the exchange rate of the country at a low level. Therefore, the
Chinese products became cheap and flooded America. And to pay for them, the
US dollars flooded China.
But rather than spend this money for the population, the Chinese leaders loaned
them immediately back to America
by buying government bonds. It was a perfect system of cheap goods and cheap
money inflow in the US,
all controlled by the Chinese political power. And that’s what created
stability. From this, came an orgy of lending from banks to even most
unreliable borrowers in the US.
Although this time, the deregulated market had been stabilized thanks to the
political intervention of China,
the bankers wanted to make more money.

So finally, in 2008 the dream
collapsed. Greenspan’s vision for a new world and Gordon Brown’s promise that
there will be no more bubbles and cracks, turned out to be fantasies based on a
wave of financial speculation. Speculation happened, because those who
controlled the economy in America
and Britain,
promised to build a new kind of democracy, based on the markets, which could
bring stability. But again and again, it led to the opposite, in chaos and
instability around the world. And now, finally it happened in the heart of the
West. But again, like in South-East Asia more than a decade ago, those who controlled the economy, triggered the political power this
time, to save and protect their sovereignty. They asked from politicians to
save them with money and politicians agreed. And again, just like in South-East Asia, the price paid by the citizens of the
countries.

And again, the outside
interference in the deregulated market, which supposedly could bring stability
and prosperity alone, was based on the protection of speculative interests at
the expense of the vast majority of the people.

And the scenario has been
played so many times, that someone could easily predict what would happen. Ireland has
been praised as a model economy and the “Celtic tiger” took the place of the
“Asian miracle”. But, as expected, the tiger died. An amount equal to 22% of
the GDP of the whole country has been given to save just one bank. Today, Ireland is
under close supervision, suffering from a monstrous total debt. In 2008, the
Greek government rushed to give 28 billion to bailout banks, even before the arrival
of crisis, and this was just the beginning.

Just before the recent
elections in Greece,
the banker Loukas Papadimos secured another 18 billion for just 4 banks. Many
other bailout packages have been given to the banks meanwhile. Just compare all
these billions with the 1.4 billion euros by 2015 that the European Investment
Bank announced for the whole small-medium business sector in Greece, and you
will understand.

And what was the result?
Increase of unemployment, lost jobs, poverty, wage and pension cuts,
destruction of the social state, increased debt and deficit. Not to mention
that after the burst of the real estate bubble in America, financial investors from
all over the world massively turned to the most secure investment: the basic types
of food. The result was the peaking prices in just a few days and hunger or
malnutrition for millions of people in the developing countries.

And now, the crisis is
threatening countries like Italy
and Spain,
approaching the heart of the eurozone. And the banks in those countries
continuously receive bailout packages of billions, with the majority of people
paying the price again, as it happened so many times before. It seems that,
this failed economic model, must be kept alive at any cost, because it is for
the benefit of the bankers and speculators.

14 July, 2012

Since the beginning of the
current crisis, Germany
tried to present it as a Greek problem, in order to hide the responsibilities
of the banks and the big capital, and the fact that Germany itself is gaining from this
crisis. The propagandistic role of the mainstream German media – and also large
portion of the Greek media - of mass consumption on this, is well known.

Until now, the middle class in
the European periphery, was playing the role of the “safety pillow” between the
lower class of the very poor and the upper class of the superrich. Through a
false – as we see clearly now – wealth and a culture of overconsumption, with
the neoliberal way of the gambling economy, bubble economy and banking loan,
middle class became the vast majority of the population in western countries
generally.

But today, the middle class
itself, is characterized by a multilevel structure, with groups of citizens who
often have conflicting interests that emerge on the surface or motivated, especially
during such an economic crisis. This fact is used successfully by the
representatives of the new order, to prevent primarily a possible massive
dynamic reaction, with unpredictable results for their plans. A typical example
in Greece,
is the conflict between the hotel owners – even small hotels – and hotel stuff.
Another characteristic example, is that many owners of small and middle
businesses, accept the cuts in the public sector wages nearly as a fair
treatment, while, on the other hand, they accept with realism, the continuing
strengthening of the banking monster with rescue packages of billions, waiting
patiently but vainly for the gates of banking loan to open again and believing
what the governments say, that this is necessary to secure deposits.

But as the prescription of
austerity and fiscal discipline fails dramatically and the game of the big banks
and their role in crisis is revealed more and more clearly, the European elite
understands that the middle class “safety pillow” in the countries of the
periphery is shrinking dangerously, and threatens to create unpredictable
unbalances. The alarm has been activated in recent Greek elections, where for the first
time in modern history of the country, a leftish party threatened the dominance
of the two-party establishment of PASOK and Nea Dimokratia which governed the
country since 1974, and is directly connected with the domestic and European
elites, beyond the fact that for the first time, the same establishment lost so
much power through recent elections.

The German leadership, which
of course is completely controlled by the big banks and multinational
corporative cartels, is now turning to its own middle class and the middle
class in developed countries of north, searching for a new counterweight, so
that, this geographically displaced middle class, could take the role of a new
“safety pillow” against the dangerous imbalances that are rising in the
southern countries and the periphery.

But the Germans now also worry,
that the excessive highlighting of the national characteristics of the
“undisciplined” and “wasteful” countries (the “lazy” Greeks, the PIIGS of the
south and the periphery etc.), against the “good students” of the north, in a –
among other things – fragmented or even multi-divided European Union, and given
the significant rise of the extreme nationalist parties across the whole
Europe, will create other imbalances much more dangerous, with an even greater
surge of extreme nationalism and the awakening of the ghosts of the past.

The only way to avoid this
type of imbalances that might prove fatal to the initiators of the new order,
is to move rapidly to a kind of federalization of the eurozone initially. It
started with the statements of Merkel-Hollande speaking for “more Europe” and then with the recent statements of Schauble
about “one parliament”, “one government” and “one minister of finances”.

In this way, the middle class
of the north will accept without question the hard austerity measures and the
destruction of the social state in the countries of the south and the
periphery, considering that these are indispensable in order to maintain its
own privileges, while on the other hand, the vast majority of the people of the
south and the periphery, will be discovering that it is pointless to seek for
the invisible enemy attacking them in a vast federation, guided by the monster
of the faceless markets, which will threaten Europe, every so often, with a
total financial disaster.

But over the time, the
“Chinification” of Europe will be planned and forwarded rapidly and spread to
every corner, in the name of economic competition against the huge cheap labor
tanks of China, India and South-East Asia.
UnlessthepeopleofEuropereactmassively, and
understand that, the neoliberal experiment that is carried out in Greece until
now, will eventually turn against them and against all those things conquered
with hard work and decades of sacrifices, such as the labor rights and the social
state, and through new struggles, manage to change the course of Europe, not
for the benefit of the dominant politico-economic elites, but for the benefit
of the vast majority of the people.

12 July, 2012

The vast majority of the
mainstream media in Greece
and abroad, tried to present the decisions of the recent European summit as a
victory of the countries of the periphery – with Italy
and Spain
leading – against countries of the “hard core” in the eurozone. For this of
course, helped also the “opium of the people”, football, where Italy’s victory over Germany in the semifinal of the
European Championship, with the goals of Mario Balotelli, coincided –
incidentally(?) – with the “victory” of the other Mario, Monti, against tough
Mrs. Merkel. Plentyofsymbolismandcoincidencesformassconsumption.

But the basic agreement, which
was advertised extensively, and refers to the direct recapitalization of the
banks by the European support mechanisms, is nothing but another victory of the
bankers against European people who suffer from the extensive and continuous
cuts in pensions and wages. That is, if for example the bankrupt banks are
large enough to be characterized as TBTF (Too Big to Fail), they will continue
to be bailed out through the “back door”, getting rid of any “disturbing” state
supervision.

Besides that, this decision
opens the door for privatization of the banks which are under state control. On
the grounds that the state would get rid of “potential” failed banks so that in
case of bankruptcy will not have the responsibility of the recapitalization and therefore adding to the debt and deficit, there is a strong possibility to
see a large wave of privatizations of the banks that remained under state
control.

Therefore, we could say that
this is just a strategic win of the big European bankers which, during the
current crisis, they found themselves in a difficult position, under the
disturbing state intervention and the governments “threatening” to nationalize
the largest financial institutions.The statements of the biggest
Greek bankers were characteristic, accepting the decision rather with a relief,
as they saw that the “risk” of the nationalization of their banks has been
removed.

Therefore, the true picture is
that the bankrupt TBTF banks will continue to be funded with taxpayers’ money
at a European level. So, what changes in effect, is that the European taxpayers
will continue to bailout banks in a European level, rather than the taxpayers
of each country bailing out separately the domestic banks. Also at a European
level, this will help larger banks to eliminate weaker competitors and banks
that will not have the appropriate access to the funding mechanisms (something
that happened in the US during the crisis of 1929 and the crisis of 2008), and
to establish definitive sovereignty over European territory, forcing the EU to
supply them with more and more liquidity, to prevent their collapse and the
collapse of the - more than ever – unified and interdependent European economy.

Therefore, it is not strange,
that the mainstream media “forgot” the fact that Mario Monti is primarily a
technocrat banker, highlighting his nationality against Mrs. Merkel’s, and
pointing this way to the direction of the win of the “poor” European south
against the “rich” European north, and burying the core and the true aspect of
the decisions.

However, what the European
“leaders” truly forgot, is actually the European people, because once again,
they didn’t seem to have any intention to take any substantial decision to
relief the suffering people and enhance the social state. In contrast, they have
chosen to facilitate bankers and secure more liquidity for them at the expense
of the European taxpayers, just as required by the neoliberal conception for
the economy function.